风险管理 Chapter 9.ppt

Risk Aversion Risk Aversion Risk Aversion By not accepting the gamble, you are saying that the possible loss of $1,000 hurts more than the possible gain of $1,000 benefits you Risk Aversion A risk averse person would require compensation (called a risk premium) before accepting the gamble in this example Risk Aversion A risk averse person would be willing to pay more than the expected loss (“risk premium”) to reduce risk Example: 2% chance of losing $10,000 Expected loss = $200 A risk averse person would pay more than $200 to eliminate the risk Risk Aversion A risk averse person would be willing to pay more than the expected loss (“risk premium”) to reduce risk Example: 2% chance of losing $10,000 Expected loss = $200 A risk averse person would pay more than $200 to eliminate the risk Other Factors Affecting an Individual’s Demand for Insurance Other Factors Affecting an Individual’s Demand for Insurance Income and Wealth First, having more wealth usually is associated with having more assets subject to loss. Second, do not have sufficient income to afford large amounts of insurance coverage. Third, the degree of risk aversion may decline as a person’s wealth increases. Fourth, limited liability often induces people with little wealth to purchase relatively little insurance against liability risk. Other Factors Affecting an Individual’s Demand for Insurance information If an individual does not perceive that a loss is possible, the expected loss is lower than the amount perceived by the insurer. Individual’s perception of loading Underestimate the true risk == buy less insurance Overestimate the true risk == buy more insurance Other Factors Affecting an Individual’s Demand for Insurance Other Sources of Indemnity If others (e.g., society or family) will pay uninsured loss, buy less coverage Other Factors Affecting an Individual’s Demand for Insurance Why do people buy insurance against monetary lo